Mubasher: The global rating agency Moody's Investors Service has assigned a first-time ‘A1’ long-term issuer rating to Saudi Arabian Oil Company (Saudi Aramco), with a ‘Stable’ outlook, according to a press release on Monday.
Moody’s further assigned a provisional (P) A1 rating to Saudi Aramco's Global Medium-Term Note (GMTN) programme.
The rating agency noted that the ‘Stable’ outlook indicates to Moody's forecast for Saudi Aramco's credit profile to remain robust despite the volatile prices of crude oil.
The joint connection between the Saudi government and the company reflects that a change in rating outlook on the government would be mirrored on Saudi Aramco's rating outlook.
Vice president and senior credit officer at Moody's Rehan Akbar commented, "Saudi Aramco has many characteristics of a Aaa-rated corporate, with minimal debt relative to cash flows, large scale of production, market leadership and access in Saudi Arabia to one of the world's largest hydrocarbon reserves. These features position it favourably against the strongest oil and gas companies that Moody's rates.”
On 27 March 2019, Saudi Aramco announced the signing of a share purchase agreement to acquire 70% stake in Saudi Basic Industries Corporation (SABIC) for $69.1 billion; this acquisition of a 70% equity from the Public Investment Fund (PIF), a state-owned sovereign wealth fund, is an extension of Saudi Aramco's strategy to expand its footprint in the chemicals industry.
“In Moody's view, credit linkages to the government of Saudi Arabia are significant and result in the decision to constrain Saudi Aramco's rating to that of the government. The company is wholly-owned by the state and is expected to remain largely under government ownership even after any potential IPO in the future,” according to the press release.
